Some Chinese pharmaceutical companies shelve IPO plans amid stepped-up anti-corruption campaign 

 

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Several pharmaceutical companies in China are shelving IPO plans as stock exchanges tightened scrutiny of the sector’s business practices amid a stepped-up anti-corruption campaign.

At least 12 healthcare companies have halted China IPO plans so far this year, data from exchanges showed.

Vaccine maker Shanghai Rongsheng Biotech Co terminated its IPO plan this week, after the company’s high proportion of sales expenses drew attention from regulators. The Shanghai Stock Exchange asked Rongsheng – whose sales expenses over the past three years were equivalent to a third of revenue – if it had “undisclosed transfer of interests to customers”, according to securities filings.

Fujian Mindong Rejuenation Pharmaceutical Co also withdrew its listing application, after the Shenzhen Stock Exchange sought details and the rationale of its sales promotion activities including academic seminars. The company’s sales expenses over the past three years amounted to nearly half of its revenue.